The measure called for closing state liquor stores and allowing state licensing of private parties. Privately owned stores were required to have at least 10,000 square feet of retail space to sell and distribute liquor.[2]

The initiative called for a 17 percent fee from retailers on all liquor sales, as well as other fees from distributors. The fee was developed in response to opponents of the 2010 measure who previously argued that the proposal would have cut millions of dollars from state revenue. In fiscal year 2010, the state of Washington received an estimated $302 million from selling liquor.[3]

The state office estimated that the 2011 initiative could generate an extra $42 million a year for the state and $38 million for local government over the span of six years. This totaled an estimated $480 million.[4]

Additionally, the proposal called for limiting the number of stores that sold liquor and made no changes to the way in which beer was distributed and sold.[3]

According to proponents, the proposed measure would generate $200 million more than the current system for both state and local governments in the measure's first two years of enactment.[5]

Aftermath

Following the November 8, 2011 vote in favor of Initiative 1183, reports indicated that efforts to privatize liquor in other states may be likely. Some such states include Utah, Pennsylvania, Virginia and North Carolina, where the issue has been raised in the past.[6] Unlike the state of Washington, other states may see success in the legislature and may not pursue a ballot measure.

The state of Oregon has also been mentioned as a state that may see liquor privatization efforts. Joe Gilliam, president of the Northwest Grocery Association, said he expects conversations to start in both Oregon and Idaho. However, he does note that both states have different systems than the State of Washington and thus different approaches may be taken.[7]

Idaho has 66 state run liquor stores and 97 contracted stores. According to January 2012 reports, some efforts have been initiated to privatize liquor in Idaho.[8]

Lawsuit

Two labor unions, the United Food and Commercial Workers and the Teamsters, are challenging Washington's recently passed liquor privatization initiative. Beside privatizing liquor sales, the unions note that the measure also changes regulations on wine distribution, liquor franchises, and alcohol advertising. This, they argue, violates the state's single-subject rule. They also argue that these changes were designed to benefit the chief backer of the measure, Costco. About 1,000 union workers are expected to lose their current jobs under the plan.[9]

On March 19, Cowlitz County Superior Court Judge Stephen M. Warning reversed his decision invalidating Initiative 1183. The measure privatized liquor sales and also allocated $10 million dollars for public safety efforts. Warning initially held that these two provisions together violated the state's single-subject rule. However, he was ultimately persuaded to reverse the decision given the connection between liquor regulation and public safety. Opponents will likely appeal the decision.[10]

Text of measure

Title

Concise Description:This measure would close state liquor stores and sell their assets; license private parties to sell and distribute spirits; set license fees based on sales; regulate licensees; and change regulation of wine distribution.

Should this measure be enacted into law? Yes [ ] No [ ]

Summary

This measure would close state liquor stores and sell their assets including the liquor distribution center. The state would license private parties to distribute spirits and to sell spirits in retail stores meeting certain criteria, subject to specified training and compliance requirements. The measure establishes licensing fees for sale and distribution of spirits based on the licensee’s sales revenues. It would change some wine distribution laws and allow non-uniform wholesale pricing for wine and spirits.

Background

2011 legislative bill

On June 15, 2011Gov. Chris Gregoire signed a bill - Senate Bill 5942 - that may have led to privatizing the state liquor wholesale-distribution system. The legislation, specifically, required the governor's budget office to solicit competitive bids to lease the state liquor warehouse and wholesale distribution system. However, the state would continue to control the retail liquor stores.[13][14]

Washington was one of 18 states where the government ran the sale and distribution of liquor.[15]

According to reports, supporters of I-1183 asked the governor to veto an emergency clause in the bill. The emergency clause allowed the state to expedite its efforts. The clause was not vetoed. If a legitimate bid was filed, a contract could have been issued. According to supporters of I-1183 and opponents of the legislative bill, the emergency clause was retained in order to undermine the proposed initiative. Officials said that was "hogwash."[13]

It remained unclear what would happen if an initiative was approved while the state was entertaining bids.[13]

Just prior to the November 8th vote, state officials announced that they abandoned two proposed bids that would have privatized Washington's liquor distribution system. According to reports, state officials said the proposals were not financially beneficial.[16][17]

2010 related measures

In 2010, two ballot measures that called for state liquor privatization appeared on the statewide ballot - I-1100 and I-1105. Costco Wholesale supported I-1100 and is supporting the 2011 effort - I-1183.

Although both I-1100 and I-1183 related to privatizing state liquor stores, unlike I-1100, I-1105 priced liquor licenses based on the volume of liquor sold. I-1100, on the other hand, did not include price controls. Both measures would have removed the state from the liquor business and allow retailers to sell "hard alcohol."[18]

On November 2, 2010 both measures were defeated. I-1100 was voted down by 53.43%, while I-1105 lost by 65.04%.

Arguments

Kathryn Stenger, Yes on 1183 spokesperson, said, "On the one hand, people love the idea because they already have a good relationship with Costco and being able to go in there and find their favorite brands, but it’s also given them some peace of mind. They know that Costco is selling beer and wine now, they know that Costco sells liquor in other states and has done so safely."[20]

In response to opponents who argued that the defeat of 2010's I-1100 and I-1105 indicated a lack of support for the issue, Stenger said, "As a voter, having two initiatives on there that dealt with it, but in different ways, made for a lot of confusion."[20]

The Association of Washington Business said, "This measure reflects a number of key changes from previous initiatives on the ballot. First and foremost, Initiative 1183 brings in more revenue for the state and would strengthen enforcement of state liquor laws. It addresses concerns about who sells alcohol, taking into account square footage and restricting sales from corner groceries and convenience stores and makes appropriate provisions for those sales in rural areas where square-footage requirements may not apply."[21][22]

The Bellevue Chamber of Commerce supported I-1183 "as a way to end the state’s monopoly of liquor sales and provide a responsible way for businesses to get engaged in this market."[23]

The Issaquah Chamber of Commerce announced their support for I-1183 on October 14, 2011. "The Issaquah chamber stands with our peers across the state in endorsing I-1183 as part of our collective goal to help support the Washington economy, encourage government reform and introduce competition into the marketplace within this industry," said chamber CEO Matthew Bott.[24]

Northwest Grocery Association president Joe Gilliam said, "It's a win-win-win. The state of Washington gets revenue for essential services. The private sector picks up a new product line that helps serve the customer. And the customer gets more convenience and a better shopping experience."[25]

Attorney General Rob McKenna announced in early November 2011 that he supported I-1183 as a citizen and not attorney general. McKenna said that Washington State was not the first state to go through deregulation and noted that states that had did not see an any social problem increases.[26]

Opponents

Arguments

"One thing that became clear is that voters of the state of Washington really didn’t want to have a huge increase in the amount of outlets selling liquor — and that’s exactly what this would do," said Alex Fryer, a spokesman for Protect Our Communities.[20]

About the measure Gov. Christine Gregoire said, "As a matter of policy, the trade-offs aren’t there for me. I just don’t think it’s the right thing for Washington State." Gregoire argued that expanded sales would help generate more revenue for the state but cautions that more sales may generate new costs to the state. For example, in treatment for drug and alcohol abusers.[36]

Opponents argued that the vague wording, a potential loophole, may allow for mini-marts to qualify for liquor licenses. The initiative said that the liquor board may not deny a retail license to businesses if "there is no retail spirits license holder in the trade area." However, the term "trade area" was not specifically defined. "This loophole is big enough to drive a liquor truck through, and that's what they're going to do," said Alex Fryer, a spokesman for the opposition group Protect Our Communities.[25]

Media editorial positions

Support

The Seattle Times said, "We believe state liquor stores should be closed and liquor sold competitively, by licensed merchants. The state's job should be to regulate liquor, not sell it.Most states do it that way. It is a common-sense idea. Yet television here is now infected by dishonest ads made to scare people into keeping the state liquor stores [...] Ignore the ad campaign. It is a heap of distortions and lies. Vote for Initiative 1183, and get the state out of the business of selling alcoholic drinks."[44]

The Columbian said, "Last year Washington voters rejected two ballot measures that would’ve privatized liquor sales and distribution in the state. The Columbian endorsed both of those measures. A similar measure — Initiative 1183 — appears on the Nov. 8 ballot, and we again enthusiastically recommend aligning Washington with more than 30 other states that have properly recognized the government’s role. It’s not to sell liquor and wine but to regulate that commerce. No more than we would expect the state to distribute and sell cigarettes (at exorbitantly marked-up prices, mind you), Washingtonians should not expect the state government to sell spirits."[45]

The Walla Walla Union-Bulletin said, "I-1183 will benefit more than those who buy booze, it will also benefit the public. It sets aside a portion of new revenues specifically to local police, fire and emergency services throughout the state...Ultimately, I-1183 gets the state out of the liquor business while generating more money for the state treasury. And this will allow the state to stick to the business of regulating liquor. We recommend voters approve I-1183."[46]

The Yakima-Herald Republic said, "We have long advocated that the state get out of the liquor business...We endorsed Initiative 1100, and we think Initiative 1183 is an improvement. It keeps revenue for governments while offering the prospect of competition driving down prices for consumers."[47]

The Spokesman-Review said, "Getting the State Liquor Control Board out of the business of selling booze and making enforcement its sole responsibility is perhaps the best attribute of I-1183. Coupled with the increase in money for local law enforcement, there should be more, not less, resources to stop alcohol abuse. Vote yes on I-1183."[48]

The Tri-City Herald said, "I-1183 isn't perfect, but none of its flaws are insurmountable. More importantly, it may be the voters' last chance to get state government out of the liquor business. The Herald editorial board recommends voters approve Initiative 1183."[49]

Sound Politics said, "Big Booze distributors vs Costco. On principle the state should not be in a private business. This initiative would require the state to sell its distribution warehouses and stores to private competition. The state would retain its regulation and enforcement responsibilities. It is estimated that the state would gain $267 million over the next six years if the measure passes."[50]

The Herald Everett said, "What will happen is consumers will have greater choice, the Liquor Control Board can focus solely on licensing and enforcement, and strapped local governments will have a new revenue source -- some of which the initiative dedicates to public safety. All compelling reasons to vote yes on I-1183."[51]

The Wenatchee World said, "Initiative 1183 allows business to profit, and the state to tax and regulate. It is the relationship as it should be. It will erase the vestiges of Prohibition, allow the state to face up to alcohol with a clean conscience, and at last end this moral conflict. Vote yes on Initiative 1183."[52]

The Skagit Valley Herald said, "It’s time that our state government removed itself from the liquor business. Selling liquor to the citizenry isn’t an appropriate function of government. Regulating how it is sold, taxing those sales and setting penalties for violators, however, is indeed government’s job. Initiative 1183 does a better job than earlier initiatives in spelling out what the government’s role should be."[53]

The News Tribune said, "The downsides are self-evident: Drunken driving, alcoholism, domestic violence, cirrhosis of the liver and other diseases, higher health care costs and on and on...Washington state does seem stuck in a post-Prohibition, New Deal regime of liquor regulation. Having reconsidered the alternatives, we’re just fine with that."[55]

The Pacific Northwest Inlander said, "If I-1183 is passed, big-box retailers would be given a big edge over small businesses. In fact, only retailers with 10,000 square feet and above would be allowed to sell hard alcohol. That’s the problem with having interested parties write public policy — they inevitably pick winners and losers. And we have too much to lose on this one."[56]

The Daily Evergreen said, "We are doubtful of the argument that I-1183 will continue to provide revenue sources for state and local governments. This is an experimental initiative at a time when the economy is not suitable for experimentation. We are also skeptical of the argument that I-1183 will allow customers to pay less for hard-liquor. In the short-term, yes, but we fully expect companies to raise their prices in the future – just as they do with all their other products."[57]

Polls

An August 24, 2011 poll by pollster Stuart Elway revealed that 50 percent of surveyed voters supported the proposed initiative, while 38 percent opposed it and 11 percent were undecided.[58] According to reports, a total of 407 registered voters were surveyed.[59]

A September 20-21, 2011 poll by pollster Stuart Elway revealed that 46 percent were in support of I-1183, while 40 percent were opposed and 15 were undecided.[60] The September 20-21 poll surveyed 408 registered voters and had a margin of error of +/- 5 percentage points.[61]

A September 21-22, 2011 poll by SurveyUSA revealed that 47 percent of surveyed voters supported the proposed initiative, while 38 percent opposed it and 14 percent said they were undecided.[62] A total of 529 registered voters were surveyed.

An October 10-30, 2011 poll by The University of Washington revealed that 50.3 percent were in support of I-1183, while 42.8 percent were opposed and 6.9 percent were undecided. A total of 938 registered voters were surveyed. The poll had a margin of error of +/- 3.2%.[63]

Legend

Position is ahead and at or over 50% Position is ahead or tied, but under 50%

The fiscal impact cannot be precisely estimated because the private market will determine bottle cost and markup for spirits. Using a range of assumptions, total State General Fund revenues increase an estimated $216 million to $253 million and total local revenues increase an estimated $186 million to $227 million, after Liquor Control Board one-time and ongoing expenses, over six fiscal years. A one-time net state revenue gain of $36.4 million is estimated from sale of the state liquor distribution center. One-time debt service costs are $5.3 million. Ongoing new state costs are estimated at $158,600 over six fiscal years.

An estimated 361,339 signatures were submitted on deadline day. According to reports, an estimated 150,000 signatures came from customers of Costco. The initiative made the ballot on July 28, 2011 when the Washington Secretary of State certified it.[64][65]

Due to the large number of submitted signatures, the initiative qualified for a random sample of 3 percent. A total 11,035 signatures were sampled with 9,714 accepted. The error rate was 13.98 percent.[66][67][68]